In January, the unemployment rate dropped to 9.7 percent, which is the lowest since August. Companies have been giving more hours and overtime to employees already hired instead of hiring new employees.

Due to a drop in construction jobs and a fall in state and local government hiring, employment fell by 20,000 in January. Before the report was released economist had predicted there would have been a gain.

There has been an increase in hours and overtime at manufacturing companies.

The unemployed have become President Barack Obama's top concern. He plans to try and recover the 8.4 million jobs that were lost since the start of the recession, but he claims it will be a difficult and slow recovery.

"The labor market, six months after the economy turned positive, is beginning to find its bottom," said Neal Soss, chief economist at Credit Suisse in New York, who forecast a payroll drop of 25,000. "We're still teetering on the cusp of job growth."

After the report stocks did not change much. The Standard & Poor's index increased 0.1 percent to 1,062.2 this morning.

Economist had predicted payroll would have increased by 15,000, and predicted the unemployment rate would have ranged from 9.8 percent to 10.3 percent.

Households that were surveyed showed an employment increased by 541,000, last month. The number of employed in the labor force increased.

In January, payrolls for the government dropped 8,000. State and local government employed were cut by 41,000. On the other hand the federal government increased there employed by 33,000.

The labor department also released data on earning and hours for workers. In January, an average work week increased to 33.9 hours from 33.8 hours in December. The report shows part-time workers are becoming full-time workers.

In January, manufacturing companies have increased payroll by 11,000, which is the biggest gain since April of 2006.

Cisco, plans on hiring 2,000 to 3,000 employees this year.

"While we believe the recovery is now occurring, no one knows for sure how strong it will be, how long it will last or the extent of new-job creation," Chief Executive John Chambers said on a conference call this week.

Financial Firms have cut 16,000 jobs and builders cut 75,000 in January.

After an 18,000 drop, retail companies have seen employment increase by 42,000.

In January, temporary workers have risen 52,000.

According to data from the Commerce Department released last week, the economy grew 5.7 percent during the forth quarter.

Economists believe the unemployment rate will average about 10 percent during 2010.